GMP Capital Inc. Reports Third Quarter 2015 Results

For further information about GMP Capital Inc., our results for third quarter 2015 and the meaning of certain references, this earnings release should be read in conjunction with our unaudited interim condensed consolidated financial statements as at and for the three and nine months ended September 30, 2015 (Third Quarter 2015 Financial Statements), and our management's discussion and analysis for the three and nine months ended September 30, 2015 (Third Quarter 2015 MD&A), which can be accessed on our website at gmpcapital.com and on SEDAR at sedar.com. Unless otherwise indicated, all dollar amounts are expressed in Canadian dollars and have been taken from our Third Quarter 2015 Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS).

TORONTO, Nov. 6, 2015 /CNW/ - GMP Capital Inc. (GMP) (TSX: GMP) today reported revenue of $53.9 million in third quarter 2015, down 20% compared with the same period a year ago. GMP recorded a net loss of $11.1 million and diluted loss per share of $0.19 in third quarter 2015 compared with net income of $6.1 million and diluted earnings per share (EPS) of $0.05 in third quarter 2014. Results in third quarter 2015 included primarily non-cash adjusting items that added $0.07 to the quarter's diluted loss per share. On an adjusted basis1, the third quarter 2015 net loss was $6.6 million and diluted loss per share was $0.12.

"The bulk of 2015 has seen a challenging operating environment. This was exacerbated in the third quarter by industry-wide declines in capital markets activity arising from weak economic growth, low commodity prices and geo-political headwinds which weighed heavily on clients' appetite for risk," said Harris Fricker, President and Chief Executive Officer, GMP. "In light of the ongoing challenging market environment we have been active throughout the year in bringing our costs down including reducing total headcount by 9% to 372 with a particular focus on leaning up our international operations. This combined with other cost containment and productivity enhancing measures across the franchise will produce savings of approximately $15 million, which equates to roughly 6% of total annual expenses."

FINANCIAL HIGHLIGHTS

Third quarter 2015 vs. Third quarter 2014

Revenue of $53.9 million compared with $67.5 million.

Net loss of $11.1 million compared with net income of $6.1 million.

Net loss attributable to common shareholders of $12.3 million compared with net income of attributable to common shareholders of $3.8 million.

Diluted loss per share of $0.19 compared with EPS of $0.05.

Return on common equity (ROE)1 of negative 20.2% compared with ROE of 5.6%.

Adjusted net loss of $6.6 million compared with adjusted net income of $4.4 million.

Adjusted diluted loss per share of $0.12 compared with adjusted EPS of $0.03 and adjusted ROE of negative 12.6% compared with ROE of 3.1%.

First nine months 2015 vs. First nine months 2014

Revenue of $186.4 million compared with $211.8 million.

Net loss of $14.5 million compared with net income of $21.2 million.

Net loss attributable to common shareholders of $17.3 million compared with net income attributable to common shareholders of $16.9 million.

Diluted loss per share of $0.26 compared with EPS of $0.23.

ROE1 of negative 9.3% compared with ROE of 8.2%.

Adjusted net loss of $8.0 million compared with adjusted net income of $23.5 million.

Adjusted diluted loss per share of $0.16 compared with adjusted EPS of $0.26 and adjusted ROE of negative 5.7% compared with adjusted ROE of 9.3%.

1.

Considered to be a non-GAAP financial measure. This measure does not have any standardized meaning prescribed by generally accepted accounting principles (GAAP) under IFRS and is therefore unlikely to be comparable to similar measures presented by other issuers. This data should be read in conjunction with the "Non-GAAP Measures" section at the end of this press release and the "Presentation of Financial Information and Non-GAAP Measures" section in the Third Quarter 2015 MD&A.

Commenting further, Mr. Fricker said "As major shareholders ourselves, we remain prudent stewards of the business. Over the past 20 years our franchise has demonstrated the ongoing ability to weather and adapt to prolonged periods of market turbulence. Our capital position, balance sheet and liquidity continue to provide us with robust competitive positioning in the financial services space."

THIRD QUARTER 2015 BUSINESS SEGMENT HIGHLIGHTS

Capital MarketsThird quarter 2015 vs. Third quarter 2014

RevenueRevenue of $51.8 million decreased 16% primarily due to lower investment banking fees.

Investment banking revenue of $30.9 million decreased 33% due to suppressed client activity in the mining and energy sectors.

Bolstered our Houston office with the addition of seasoned senior research professionals, building upon already extensive client coverage.

Wealth ManagementThird quarter 2015 vs. Third quarter 2014

Wealth Management reported a loss before income taxes of $2.4 million compared with income before income taxes of $2.1 million.

Third quarter 2015 reflects the impact of $0.9 million in costs associated with the wind-down of CQI's fund operations. Third quarter 2014 results included a dilution gain of $2.0 million.

On an adjusted basis, loss before income taxes was $1.5 million compared with adjusted income before income taxes of $0.2 million.

Richardson GMP Highlights:The following information sets forth an overview of the consolidated financial results of Richardson GMP, on a 100% basis; noting, however, that GMP owns approximately a 31% non-controlling interest in Richardson GMP as at September 30, 2015.

Revenue of $64.9 million representing a 14% decrease primarily driven by lower commissions.

Adjusted EBITDA2 of $7.7 million decreased 40%.

Assets under administration2 of $25.9 billion as at September 30, 2015, decreased 9% largely in line with the decline in equity markets.

194 advisory teams at the end of the quarter compared with 199 at the end of the prior year quarter. Three advisory teams were added in October 2015.

2.

Considered to be a non-GAAP financial measure. This data should be read in conjunction with the "Supplemental Information" section at the end of this press release and in the Third Quarter 2015 MD&A.

DIVIDENDS

On November 5, 2015, GMP's board of directors declared a quarterly cash dividend of $0.05 per common share, and a quarterly cash dividend of $0.3438 per Cumulative 5-Year Rate Reset Preferred Share, Series B, each payable on December 31, 2015, to the respective shareholders of record on December 15, 2015.

CONFERENCE CALL

A conference call and live audio webcast to discuss GMP's third quarter 2015 results will be held this morning at 10:00 a.m. (EST). GMP executives will host the call followed by a question-and-answer session for analysts and institutional investors. Interested parties are invited to access the quarterly conference call on a listen-only basis by dialing 416-340-2216 or 1-866-225-0198 (toll free) or via live audio webcast at http://gmpcapital.com/Investor-Relations/Quarterly-Information. A recording of the conference call will be available until Friday, November 13, 2015, by dialing 905-694-9451 or 1-800-408-3053 (toll free) and entering access code 8052336#. The webcast will be archived at http://gmpcapital.com/Investor-Relations/Quarterly-Information.

NON-GAAP MEASURES

We use certain measures to assess our financial performance that are not GAAP measures under IFRS. These measures do not have any standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other issuers. Non-GAAP measures should not be considered as alternatives to net income or comparable metrics determined in accordance with IFRS as indicators of GMP's performance, liquidity, cash flows and profitability. For further information, refer to the "Presentation of Financial Information and Non-GAAP Measures" section in the Third Quarter 2015 MD&A.

The following table provides a reconciliation of GMP's reported results to its adjusted measures including the composition of the adjusted measures for the periods presented.

($000, except as otherwise noted)

Three months endedSeptember 30

Nine months endedSeptember 30

2015

2014

2015

2014

Reported Results

(Loss) income before income taxes

(7,062)

8,827

(6,754)

30,316

Income tax expense

4,060

2,772

7,746

9,138

Net (loss) income

(11,122)

6,055

(14,500)

21,178

Net (loss) income attributable to common shareholders

(12,334)

3,818

(17,336)

16,909

Reported Measures

Net (loss) income per common share (dollars):

Basic

(0.19)

0.06

(0.26)

0.24

Diluted ¹

(0.19)

0.05

(0.26)

0.23

ROE ²

(20.2)%

5.6%

(9.3)%

8.2%

Pre-Tax Impact of Adjusting Items

Bond forward unrealized losses

563

—

3,032

—

Share of associate's MPW Canada integration costs

—

—

—

3,489

Retention shares

135

585

435

1,491

Dilution gain

—

(1,978)

—

(1,978)

Wind-down of CQI fund operations

898

898

Impact of adjusting items on income before income taxes

1,596

(1,393)

4,365

3,002

After-Tax Impact of Adjusting Items

Bond forward unrealized losses

415

—

2,235

—

Share of associate's MPW Canada integration costs

—

—

—

3,489

Retention shares

75

326

242

832

Dilution gain

—

(1,978)

—

(1,978)

Wind-down of CQI fund operations

662

662

Deferred tax asset write-down

3,368

—

3,368

—

Impact of adjusting items on net (loss) income

4,520

(1,652)

6,507

2,343

Adjusted Results ²

(Loss) income before income taxes

(5,466)

7,434

(2,389)

33,318

Net (loss) income

(6,602)

4,403

(7,993)

23,521

Net (loss) income attributable to common shareholders

(7,814)

2,166

(10,829)

19,252

Adjusted Measures ²

Net (loss) income per common share (dollars):

Basic

(0.12)

0.03

(0.16)

0.28

Diluted ¹

(0.12)

0.03

(0.16)

0.26

ROE

(12.6)%

3.1%

(5.7)%

9.3%

1.

In the case of a net loss, the effect of common share options potentially exercisable and the impact of shares pledged on share purchase loans and other common shares subject to vesting conditions under share-based compensation programs on diluted net loss per common share will be anti-dilutive; therefore, basic and diluted net loss per common share will be the same.

2.

Considered to be non-GAAP financial measures. These measures do not have any standardized meaning prescribed by GAAP under IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. This data should be read in conjunction with the "Presentation of Financial Information and Non-GAAP Measures" section of the Third Quarter 2015 MD&A, which sets out the composition of the measures for the periods presented.

SUPPLEMENTAL INFORMATION

The following supplemental information reflects how management of Richardson GMP assesses the financial performance of Richardson GMP.

Supplemental Financial Information - Richardson GMP

Richardson GMP's management assesses performance on both a reported and an adjusted basis and considers both bases to be useful in assessing underlying, ongoing business performance. Presenting results on both bases also permits readers to assess the impact of specified items on financial results. Richardson GMP's management uses certain measures to assess the financial performance of Richardson GMP that are not GAAP measures under IFRS. EBITDA and adjusted EBITDA do not have any standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other issuers. These Non-GAAP measures should not be considered as alternatives to net income or comparable metrics determined in accordance with IFRS as indicators of Richardson GMP's performance, liquidity, cash flows and profitability. Richardson GMP's management believes adjusting results by excluding the impact of the specified items is more reflective of ongoing financial performance and cash generating capabilities and provides readers with an enhanced understanding of how management views Richardson GMP's core performance. For further information, refer to the "Supplemental Information" section in the Third Quarter 2015 MD&A.

The following table sets forth an overview of the consolidated financial results of Richardson GMP for the periods indicated, on a 100% basis; noting, however, that GMP owns approximately a 31% non-controlling interest in Richardson GMP as at September 30, 2015.

Three months ended

%

Nine months ended

%

September 30

increase/

September 30

increase/

($000, except as otherwise noted)

2015

2014

(decrease)

2015

2014

(decrease)

Revenue

64,925

75,810

(14)

204,833

238,808

(14)

Expenses

65,087

71,047

(8)

201,861

232,570

(13)

Employee compensation and benefits

45,001

50,692

(11)

140,999

160,421

(12)

Non-compensation expenses

20,086

20,355

(1)

60,862

72,149

(16)

Net (loss) income - reported

(162)

4,763

(103)

2,972

6,238

(52)

Pre-tax impact of adjusting items

Interest

1,482

2,068

(28)

4,633

5,769

(20)

Depreciation and amortization

1,608

1,338

20

4,592

4,032

14

Transition assistance loan amortization

3,671

3,455

6

10,529

10,038

5

EBITDA1

6,599

11,624

(43)

22,726

26,077

(13)

MPW Canada integration costs

—

—

—

—

10,973

(100)

Share-based compensation

1,111

1,191

(7)

3,721

5,311

(30)

Adjusted EBITDA1

7,710

12,815

(40)

26,447

42,361

(38)

Number of advisory teams

194

199

(3)

Assets under administration at period-end ($ millions)1

25,875

28,493

(9)

1.

Considered to be a non-GAAP financial measure. This data should be read in conjunction with the "Supplemental Information" section in the Third Quarter 2015 MD&A.

FORWARD-LOOKING INFORMATION

This press release contains "forward-looking information" as defined under applicable Canadian securities laws. This information includes, but is not limited to, statements concerning our objectives, our strategies to achieve those objectives, as well as statements made with respect to management's beliefs, plans, estimates, projections and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking information generally can be identified by the use of forward-looking terminology such as "outlook", "objective", "may", "will", "expect", "intend", "estimate", "anticipate", "believe", "should", "plans" or "continue", or similar expressions suggesting future outcomes or events. Such forward-looking information reflects management's current beliefs and is based on information currently available to management.

Forward-looking information is not a guarantee of future performance and is subject to numerous risks and uncertainties, including those described in this press release. GMP's primary business activities are both competitive and subject to various risks. These risks include market, credit, liquidity, operational and legal and regulatory risks and other risk factors including, without limitation: variation in the market value of securities, volatility and liquidity of equity and fixed income trading markets, volume of new financings and mergers and acquisitions, dependence on key personnel and sustainability of fees. Other factors, such as general economic conditions, including interest rate and exchange rate fluctuations, may also have an effect on GMP's results of operations. Many of these risks and uncertainties can affect GMP's actual results and could cause its actual results to differ materially from those expressed or implied in any forward-looking information disclosed by management or on its behalf. For a description of additional risks that could cause our actual results to materially differ from our current expectations, see "Risk Management" in the Third Quarter 2015 MD&A and "Risk Factors" in GMP's annual information form. These risks and uncertainties are not the only ones facing GMP together with its consolidated operations controlled by it and its predecessors (GMP Group). Additional risks and uncertainties not currently known to us or that we currently consider immaterial may also impair the operations of the GMP Group. Material assumptions or factors underlying the forward-looking information contained in this press release include, but are not limited to, "Business Environment and Outlook", "Third Quarter 2015 Financial Highlights", "Segment Results ", "Liquidity and Capital Resources" sections of the Third Quarter 2015 MD&A. Although forward-looking information contained in this press release is based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with this forward-looking information. Certain statements included in this press release may be considered a "financial outlook" for purposes of applicable Canadian securities laws, and as such the financial outlook may not be appropriate for purposes other than this press release. The forward-looking information contained in this press release is as of the date of this press release, and should not be relied upon as representing GMP's views as of any date subsequent to the date of this press release. Except as required by applicable law, management and GMP's board of directors undertake no obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise.

ABOUT GMP CAPITAL INC.

GMP is a leading independent diversified financial services firm headquartered in Toronto, Canada, providing a wide range of financial products and services to a global client base that includes corporate clients, institutional investors and high-net-worth individuals in two integrated reporting segments. The Capital Markets segment provides investment banking, including advisory and underwriting services, institutional sales and trading and research through offices located in Toronto, Montreal, Calgary, New York, Houston, Stamford, Miami, Dallas, London, Perth, Sydney, Hong Kong and Beijing. Wealth Management consists of GMP's non-controlling ownership interest in Richardson GMP Limited. Richardson GMP Limited, Canada's largest independent wealth management firm, is focused on providing exclusive and comprehensive wealth management and investment services delivered by an experienced team of investment professionals. GMP is listed on the Toronto Stock Exchange under the symbol "GMP". For further information, please visit our corporate website at gmpcapital.com.